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Health Insurance Crisis 45.8 million were uninsured in 2004 –Up from 45 million in 2003 –National Percentage has remained at 15.7% –1998 – 16.3% uninsured –2000 14.2% uninsured –Illinois 14.2 % -- below the national average –Majority of uninsured work for firms with less than 100 employees

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Who are the uninsured 1/3 have incomes less than $25,000 1/6 have incomes over $75,000 41% 18-34 years Old 21% 45-64 79% were employed full or part time

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Can we do more? 1.Provide access to low-cost health insurance for those with low incomes 2.Decrease the uninsured rate 3.Ensure health insurance remains affordable

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Targeting Solutions The uninsured are diverse…young, older, rich, poor, employed, and unemployed Solutions should be targeted to specific populations There is no one solution to everyones problem

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How Do States Regulate Insurance Large Group –Mostly ERISA plans outside of state control –Flexibility in rating, no guaranteed issue Small Group & Individual –Primarily state regulated products –Face numerous cost drivers –Smaller groups

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Pooling Arrangements Pooling arrangements are designed to provide large group benefits to small groups –Often increases choice in the marketplace –Competes with the private market –Usually limited to small segment of the population (small businesses, farmers) –Rarely leads to significantly decreased costs

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Pooling Arrangements State Employee Plans – allows private individuals or small groups to purchase state employee insurance –Very difficult to appropriately price –Benefit plans often richer than the private market –Guaranteed issue/ community rated coverage leads to death spiral

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Pooling Arrangements Co-operative Plans – allows cooperatives – especially farmers – to sell a plan designed for its members –Flexible plan design allows coverage to reflect members needs –Community Rated plans may lead to death spirals –May create unlevel playing field for the rest of the private market

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State Run Pools State-run pools – These plans compete with the private market replacing the private insurer with the state –Plans are often guarantee issue and community rated –Unless the plans offer additional cost savings features (i.e. mandate-lite, or tax savings) very little savings –Can become a dumping ground for high risk companies leading to a death spiral.

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Public-Private Partnerships Dirigo Health – Sold as a public-private partnership –Created to solve problems caused by guarantee issue and community rating –Subsidized with tax on insured people –Premiums and plan design based on sliding scale – Limits on private healthcare investment –Strict insurer rate review –Only 25% previously uninsured –Only 7300 currently enrollees Weve spent more than $40 million of federal money … to essentially insure 2,300 or 2,400 people State Sen. Karl Turner

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Public-Private Partnerships Healthy New York –New York has guarantee issue, community rating and no high risk pool –Covers 107,000 people –Reinsures coverage between $5,000 - $75,000 –Community rated and guarantee issue (similar to NY) –HMO based (no out-of-network coverage) –Limited benefit policies (eliminates mandates) –Losses funded by the state of New York –Primarily targeted at uninsured poor (individual and small group coverage)

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Mandate-Lite Insurance plans Lower cost benefit plans -- sometimes referred to as limited benefit plans Allow carriers to offer plans without state mandated benefits. (CAHI estimates Illinois has 38benefit mandates. States often limit the ability of carriers to offer these plans. (uninsured, market share, poor, or limited plan design) Uptake has been low in many states (commissions, up selling, unattractive benefit limitations)

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Health Savings Accounts Health Savings Accounts have been successful at targeting some uninsured Consensus number is around 30% of H.S.A. purchasers were previously uninsured Successful at targeting very small businesses (50% previously uninsured) State Tax deductibility helps protect employees

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High Risk Pools 32 states have them including Illinois Targets individuals who are uninsurable Pools should have broad-based funding Extremely successful in ensuring healthy individual market

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Voluntary Reinsurance Pools Voluntary reinsurance pools allow carriers to pool the costs of high risk cases Very few carriers participate in most states Even fewer individuals are covered under the pool Primary benefit is to ensure solvency of very small carriers

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Underwriting Targets the young by making insurance more affordable Leads to more affordable insurance by creating a healthier pool Medical Waivers (or Riders) allow individuals with certain medical conditions to obtain standard coverage

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Association Insurance / Choice Act Association Group insurance is currently sold to individuals in many states Many association carriers domiciled in Illinois Premium taxes can affect their competitiveness in other states Targets a variety of the uninsured Provides new insurance options in the states Lower cost plans through administrative savings

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Sound / Tonik Benefit Plan Offered BC/BS and Unicare in a variety of states –Premiums in California and Illinois from $60-$83, higher in other states –Successful at targeting invincibles –Unique plan designs High deductible 4 Dr Visits Limited drug coverage Includes dental and vision coverage